July 11, 1991
TO: FEDERAL LEGISLATION MEMBERS NO. 8-91
FEDERAL LEGISLATION COMMITTEE NO. 9-91
RE: INSTITUTE TESTIMONY ON SEC REGULATION OF
BANK SECURITIES ACTIVITIES
__________________________________________________________
Last month, the Institute testified before the
Telecommunications and Finance Subcommittee of the House Energy
and Commerce Committee on H.R. 797, the "Securities Regulatory
Equality Act of 1991," and related portions of H.R. 1505, the
Administration's bill to restructure the financial services
industry. H.R. 797 has been introduced by the bipartisan
leadership of the Energy and Commerce Committee: John Dingell (D-
MI), Norm Lent (R-NY), Edward Markey (D-MA) and Matthew Rinaldo
(R-NJ).
In its testimony, the Institute expressed strong support for
H.R. 797 and the bill's emphasis on "functional regulation,"
calling it "an important step towards modernizing our securities
laws to reflect existing and proposed bank securities activities."
The Institute identified the following steps necessary to
implement functional regulation of securities activities:
1. The exemptions for banks under the federal securities
laws should be repealed;
2. Bank securities activities should be conducted through
separate affiliates, which would be fully subject to SEC
regulation; and
3. The federal securities laws should be amended to address
investor protection problems raised by bank entry into the
securities business, such as providing "firewalls" to
protect mutual funds and their shareholders from conflicts
on the part of any affiliated bank.
The Institute noted that the approach of H.R. 797 in the areas of
functional regulation is preferable to the approach in the
Administration's bill.
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The Institute also suggested additional investor protection
provisions for H.R. 797 and related provisions of H.R. 1505.
With respect to the Administration' bill, the Institute
stated the importance of giving ample time to the Energy and
Commerce Committee and its Subcommittees to consider financial
services restructuring legislation.
A copy of the Institute's testimony is attached. Please
call if you wish further information. We will keep you informed
of further developments.
This memo can also be found on FUNDS, the Institute's Fund
User Network and Delivery Systems, under Legislative Affairs,
Washington Update.
Julie Domenick
Vice President-Legislative Affairs